Cash in hand against a deposit? According to the association, pawnbrokers have had good business recently. Inflation is now weakening in Germany – what are the consequences for the industry?
According to the association, the need for loans from pawnbrokers remains high despite the fact that inflation has now slowed. There has been a noticeable increase in business due to the corona pandemic, high inflation and high energy costs, said the managing director of the Central Association of the German Pawn Lending Industry (ZDP), Wolfgang Schedl. Local member companies reported this to him. He didn’t have any concrete figures.
The pawn loan is used to quickly bridge financial bottlenecks. Items such as jewelry, gold coins, watches or valuable porcelain and works of art are loaned out. Customers receive the loan paid out in cash. Interest and fees are due. If the customer pays everything back on time, he can take the loaned item back with him. If not, it will be auctioned off.
The recently weakening inflation in Germany has not yet had an impact on pawnshops. “So far we cannot say that business is slowing down,” said Schedl. It remains to be seen how this will affect customers’ credit needs. It is currently not foreseeable whether business will weaken. If the creditworthiness requirements of credit institutions increase in the future and the creditworthiness of bank customers declines, Schedl believes that a further revival of the pawn loan business is conceivable.
On Tuesday, the Federal Statistical Office in Wiesbaden reported based on preliminary data that consumer prices in March were 2.2 percent above the previous year’s level. This is the lowest value since April 2021 when it was 2.0 percent. In February the annual inflation rate was 2.5 percent and in January it was 2.9 percent. Higher inflation rates reduce the purchasing power of consumers. People can afford one euro less. Last year, many consumers therefore turned the red pencil. Private consumption failed to provide an important economic support.
Source: Stern
